By FXEmpire.com
The Light Sweet crude markets fell hard on Wednesday as the global economic concerns continue. The demand for oil has simply slowed down, and there is a bit of a “risk premium” about the Iranian situation being taken out of the price of oil at the moment. This of course leads to lower prices, and as a result the $90 level finally gave way during the session.
The strengthening US dollar hasn’t helped the situation either. The value of the Dollar can rise along with oil, but not often. The fact that the Dollar is rising out of fear certainly isn’t going to do oil any favors, and as the Euro keeps falling, the oil prices will as well.
The market has been held up by the $90 mark, and this was an area that we had been watching with keen interest. The level is certainly broken at this point, and it now looks as if the momentum has increased on the downside. The bears are without a doubt in charge at this point.
The selling of this market is the only thing we can do at this point, and rallies will simply be viewed as gifts to us at this point. After all, this market could be the “gift that keeps on giving” if the global situation doesn’t perk up. At this point in time, there is absolutely no reason to bet against the Dollar and with recent correlations being what they are – buying oil would be doing exactly that. Because of this, we feel this is a sell only market at this point in time.
The $90 level giving way is a sign that we are heading down to first $85, and then $80. In the meantime, we will see little pops in price, but as mentioned above – they are to be sold. The breaking below of the $90 level was significant momentum shift and looks to be a major signal. The Iranians are being somewhat compliant, but not necessarily so – and the market seems to ignore them at this point. Selling rallies and fresh lows down to the $80 level is our plan now.
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Originally posted here
